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[2015] ZAWCHC 168
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Maverick Trading 1581 CC v Oasys Innovations (Pty) Ltd (8069/2015) [2015] ZAWCHC 168 (7 October 2015)
IN
THE HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION, CAPE TOWN)
Case No:
8069/2015
DATE: 07 OCTOBER
2015
In
the matter between:
MAVERICK
TRADING 1581
CC
...........................................................................................
Applicant
(Registration
Number: 2010/041991/23)
And
OASYS
INNOVATIONS (PTY)
LTD
...................................................................................
Respondent
(Registration
Number: 2002/015718/07)
JUDGMENT
DELIVERED
07 OCTOBER 2015
BOQWANA,
J
Introduction
[1]
This is an application for
provisional liquidation of the respondent. The applicant
alleges that it is a creditor in that
the respondent owes it a debt
which was initially stated to be R 395 401.93 in the founding
affidavit, but was later in the same
founding affidavit stated as
different amounts, as well as the replying affidavit. The applicant
alleges that the respondent is
insolvent and unable to pay its debts
as and when they fall due and that it is just and equitable to grant
an order for its provisional
liquidation. The respondent denies that
any claim exists.
[2]
At the start of these proceedings
the respondent applied for leave to file a further affidavit which
was not opposed by the applicant.
The further affidavit presented by
the respondent sought to deal with the indebtedness set out in the
replying affidavit which
was allegedly based on different sets of
figures and a different conclusion as compared to the position in the
founding affidavit.
Having considered the issue I granted the
respondent leave to file the additional affidavit.
Jurisdictional
point
[3]
A preliminary point of jurisdiction
was taken by the respondent on the basis that the registered office
of the respondent is 6 Dwars
Street, Krugersdorp, and accordingly
this court lacked jurisdiction to hear this matter. It seems that
both parties’ counsel
were in agreement in their heads of
argument that the only court that can grant the winding up of a
company is the one in whose
jurisdiction the registered office of
such company was located. This view was held in the decision of
Sibakhulu Construction (Pty) Ltd vs
Wedgewood Village Golf Country Estate Ltd (Nedbank intervening)
2013
(1) SA 191
(WCC)
where the court stated
that under the Companies Act, 71 of 2008 (‘the new
Companies
Act&rsquo
;) the company’s ‘place of residence’
could only be in one place and that place was to be its registered
office.
It was furthermore held that such registered office also had
to be at the company’s only office or, alternatively, if it has
more than one office, its principal place of business.
[4]
Applicant’s counsel, Mr van
der Linde, submitted, however, during oral argument that he had come
across a decision of the
full court of this Division, namely,
Van
der Merwe vs Duraline (Pty) Ltd (7344/2013) [2013] ZAWCHC 213 (23
August 2013)
penned by Gamble J which
seemed to disagree with the position held in
Sibakhulu.
[5]
It appears that in the
Van
der Merwe
judgment a full court was
convened to deal with the issue of jurisdiction in relation to
winding-up proceedings, after the applicant
in that matter disagreed
with the conclusions made by the court in
Sibakhulu
.
[6]
Gamble
J in
Van
der Merwe
concluded
that, given the fact that the new
Companies Act specifically
provided
that liquidation proceedings (save in respect of solvent companies)
are to be brought under chapter 14 of the Companies
Act 61 of 1973
(‘the old Act’), the dual jurisdiction regime recognised
under the old Act by virtue of the definition
of ‘Court’
[1]
,
read with the provisions of section 12
[2]
thereof, prevails in respect of such proceedings, notwithstanding the
introduction of the new Act (at para 25). As such the court
concluded
that a creditor was entitled to approach the Court in whose
jurisdiction the main or principal place of business was
located,
in circumstances where the registered office of the company is
located elsewhere.
[7]
Mr van der Linde also referred to
the judgment of the Northern Cape Division,
De
Bruyn v Grandselect 101 (Pty) Ltd and Another
(1961/2013)
[2014] ZANCHC 3
(5 March
2014),
which disagreed with the
conclusions reached by the court in
Sibakhulu
and found that ‘[the] Court would
have jurisdiction to determine the liquidation or business rescue
application of a company
whose principal place of business and/or
registered office is situated in its area of jurisdiction.’ (at
para 13)
[8]
It was held in
Leibowitz
t/a Lee Finance v Mhlana and Others
[2006] 4 All SA 428
(SCA)
at para 9 that ‘[T]he principal place of business of a company
for jurisdictional purposes is the place where the central
control
and management of a company are situated.’
[9]
Mr Troskie SC, who appeared for the
respondent, submitted during oral argument that the respondent had no
difficulty with the position
as illustrated in
Van
der Merwe
and
de
Bruyn.
I therefore do not need to
decide the issue. He however submitted that even if those decisions
were to be followed, they do not
assist the applicant in its case at
all, in that it neither instituted the process at the respondent’s
registered address
nor its principal place of business.
[10]
The applicant alleged in its
founding affidavit that this Court has jurisdiction to determine this
application particularly because
the respondent’s principal
place of business and main office are situated at Unit 9 and 11, 6
th
Street, Montague Gardens in the Western Cape. This seems to be
different to an earlier averment that the Montague Gardens
address is
the respondent’s main office for the Western Cape area
and the later allegation that the main office
within the Gauteng region is situated at 8 Harry Street, Robertsham.
It must also
be kept in mind that the applicant was aware of the fact
of the respondent’s registered address being in Krugersdorp: it
alleged such a fact in its founding affidavit, and further annexed a
company report from Windeed reflecting the respondent’s
registered address as at 24 April 2015 to be 6 Dwars Street,
Krugersdorp.
[11]
In dealing with this issue in its
answering papers, the respondent contends that the office in Montague
Gardens is simply an office
in the Western Cape and there is no
significance in describing it as a main office, particularly with
reference to jurisdiction.
It avers that its operating mind is at its
Johannesburg office, situated in Robertsham. Mr van der Linde
criticised the respondent
for not providing any further details about
its ‘principal place of business.’ He argued that this is
a bald allegation
which ought to be rejected.
[12]
The applicant in its replying
affidavit alleges that the sheriff attempted to serve the papers at
the respondent’s registered
address but was unable to do so
because the respondent’s erstwhile auditors to whom the
registered address belonged were
no longer auditors for the
respondent. In that regard the applicant submitted that the
respondent had no connection with that address
anymore. Phillip
Glasser (‘Glasser’), the deponent to the replying
affidavit (and the founding affidavit), claims that
he was advised
that the Cape Town address and the Johannesburg address are ‘on
a par with one another.’ Apart from
him not revealing his
source of information on this particular issue, this allegation seems
to be in conflict with an assertion
made in the founding affidavit
that the respondent’s principal place of business and main
office are situated at Montague
Gardens in the Western Cape.
[13]
Mr van der Linde submitted in
his heads that the applicant was faced with a problem that the
respondent’s registered
address is clearly an address of
convenience, the respondent does not trade from there, and it was not
the address of the auditors
nor does it seem to have any connection
with the respondent. According to Mr van der Linde, the applicant
chose to institute proceedings
in the Western Cape where it has
always dealt with the respondent and in which the applicant knows an
address from which the respondent
conducts its business and at where
it can be contacted. He argued further that the applicant would not
know what the principal
place of business of the respondent is and
was accordingly entitled to assume, based on the amount of work that
it does with the
respondent which appears to be mainly in the Western
Cape and the fact that the applicant’s account is wholly
administered
by the Cape Town office of the respondent, that the
Western Cape is the area in which the respondent’s principle
place of
business is located.
[14]
Nothing is said in the applicant’s
papers as to what steps it took to establish what the principal place
of business for the
respondent was. It cannot be entitled to simply
assume that the respondent’s principal place of business was
located in the
Western Cape office when it knew that apart from
the registered address, there was another office in Robertsham in
Gauteng, which
on the applicant’s own version is described as
being on par with the Western Cape office. The applicant did not
ascertain
which of these offices was the actual principal place of
business for the whole country, and not simply in respect of a
particular
province.
[15]
It seems to me that the applicant
merely brought the proceedings before this court on the basis of
convenience. It is significant
that the applicant was not consistent
on this issue in its papers. In the first instance it stated that the
Montague Gardens office
was the main office ‘for the Western
Cape area’ and later on it stated that Montague Gardens was the
respondent’s
principal place of business. It went on to state
in reply that the Cape Town and Johannesburg offices are on par with
one another.
[16]
In my view, there is no evidence
that supports Mr van der Linde’s argument that the applicant
would not know what the principal
place of business of the respondent
is and was accordingly entitled to assume that it was located at the
Cape Town office based
on the amount of work that it does with the
respondent which appears to be mainly in the Western Cape and the
fact that the applicant’s
account is wholly administered by the
Cape Town office of the respondent. Secondly, I do not believe that
the respondent was required
to say anything more than what it has
said in its answering papers to the effect that its operational mind
was in Gauteng. It is
indeed logical, as Mr Troskie put it, that most
of the work done by the respondent with the applicant would be in the
Western Cape
because the applicant is in Cape Town. The
applicant has not been able to show that the central control and
management of
the respondent are situated in the Western Cape. I
disagree that it was up to the respondent to ‘prove’ that
indeed
the Gauteng office is where the central and management control
of the company are situated. It has made an allegation to that effect
and I do not think any more than that is required of it.
[17]
In
terms of the
Plascon-Evans
rule
[3]
, where disputes of fact
in motion proceedings arise in the affidavits, a final order could be
granted only if the facts averred
in the applicant’s affidavit
and admitted by the respondent, together with facts alleged by the
latter, justify such order.
If the respondent’s version,
however, consists of bald or implausible denials, raises fabricated
disputes of fact, or are
palpably implausible, far- fetched or
untenable such that the court would be justified in rejecting it
merely on papers, the situation
would be different.
[18]
I
agree with Mr Troskie that this is not the case where it could be
said that the respondent’s version as to the place where
the
central management and control of the respondent are located is
far-fetched. It must be remembered that the test in situations
where
disputes of fact are present is a stringent one.
[4]
[19]
In conclusion on this point,
the respondent’s assertion that the registered place of
business is in Gauteng is in fact confirmed
by the applicant in its
own papers. The consolidated annual financial statements of the
respondent also confirm the respondent’s
registered address. As
regards the respondent’s principal place of business, the
applicant essentially showed that it was
unsure of the location of
the respondent’s principal place of business. In that regard,
it could not assume that the ‘main
office’ was Montague
Gardens; it would have been expected of it to either investigate
where the principal place of business
was or bring the application in
the court in whose jurisdiction the registered address was situated.
[20]
The issue of service of process is a
different issue altogether to the question of which court would have
jurisdiction to grant
a winding up order. See
Standard
Bank Ltd v Butlin
1981 (4) 158
(D) at 165 C where the Court said the following:
‘
The
service of processes is one thing. Jurisdiction is quite
another. They are separate and distinct topics, lending
themselves to treatment that is separate and distinct.’
Also, see
ISM
Inter Ltd v Maraldo and Another
1983 (4) SA 112
(T) at 115 F-G
where the Court stated:
‘
The
fact that service may be possible within a court’s jurisdiction
whilst the court has no jurisdiction in the action (eg
when nothing
more than a chosen
domicilium
for service falls within the court’s jurisdiction) or that the
court may have jurisdiction (eg because the cause of action
arose
within its area or the defendants is domiciled in that area) but
service within its area is not possible, perhaps because
the
defendant resides abroad, demonstrates that the possibility of
service and the existence of jurisdiction remain two distinct
questions. To put it differently. “the question of service does
not affect the question of jurisdiction”. (
Grimshaw
v Mica Mines Letd
1912 TDP 450 at
456).’
Finally see
Leibowitz t/a Lee Finance v Mhlana
supra at para 9 where the
Court said that: ‘…there is a vast difference between ‘a
company’s principal
place of business’ and ‘a
company’s principal place of business within the court’s
jurisdiction’.
The principal place of business of a company
for jurisdictional purposes is the place where the central control
and management of
a company are situated (
Bisonbaord
at
496C
).
The Court
a
quo
therefore erred in
holding that the Court of first instance had jurisdiction over the
insurance companies by reason of their principal
places of business
being situated within the Transkei.’ (Own emphasis)
[21]
The applicant in this case had
knowledge of the different addresses where it could effect service
upon the respondent. It would
not have been prevented from
instituting the process in Gauteng simply because the registered
address was no longer an address
in which business was conducted,
where such address had not been changed by the respondent.
Furthermore, it knew that another office
existed in Johannesburg
which seemed to be on par with the Cape Town office and did not
follow up to confirm which of these addresses
was the principal place
of business. It persisted with this application even upon the
respondent alleging that the main office
was in Robertsham.
[22]
For those reasons, the applicant
falls short on both the
Sibakhulu
and the
van der Merwe
decisions.
It can therefore be dismissed on the basis of jurisdiction alone. I
will nonetheless deal with the merits of this case,
notwithstanding
my findings on the question of jurisdiction, in the event I am found
to be wrong on such point.
Applicable
legal principles - Provisional order
[23]
The legal principles applicable in a
provisional liquidation application that is in opposed are trite.
The applicant must
establish that it is entitled to a provisional
order on a
prima facie
basis.
It must show that the balance of probabilities on the affidavits is
in its favour.
[24]
In the matter of
Orestisolve
(Pty) Ltd t/a Essa Investments v NDFT Investments Holdings (Pty) Ltd
and Another
2015 (4) SA 449
(WCC)
Rogers J held at paragraph 8, ‘Even if the applicant
establishes its claim on a
prima facie
basis, a court will ordinarily refuse the application if the claim is
bona fide disputed on reasonable grounds.’. In
Orestisolve
,
Rogers J further held that a distinction must be drawn between
factual disputes on the respondent’s liability and those
that
exist in relation to the other requirements for liquidation. In
relation to the claim, the court must not only consider where
the
balance of probabilities lies on the papers, it must also consider
whether the claim is bona fide disputed on reasonable grounds.
The
court may reach that finding even if the applicant has established a
prima facie
claim on a balance of probabilities. However, where the applicant has
shown that the debt
prima facie
exists, the onus is on the respondent to show that it is bona fide
disputed on reasonable grounds. (
Orestisolve
supra at para 8 also citing
Badenhorst v
Northern Construction Enterprises (Pty) Ltd
1956 (2) SA 346
(T) at 347H-348C;
Payslip
Investment Holdings CC v Y2K Tec Ltd
2001
(4) SA 781
(C) at 783G-I and
Hulse-Reutter
& Another v HEG Consulting Enterprises (Pty) Ltd
1998 (2) SA 208
(C) at 218-219C.
Facts
[25]
During 2010 the applicant,
represented by Glasser, and the respondent, represented by Lappies
Labuschagne (‘Labuschagne’),
concluded an agreement in
terms of which the applicant would supply goods and services to the
respondent from time to time upon
the respondent’s request and
special instance on the ‘usual terms and conditions’. The
applicant alleges that
the agreement was partly oral and partly
written which is disputed by the respondent, who alleges the contract
to be only oral.
Nothing turns on this issue, however, as the
conclusion of an agreement is common cause.
[26]
The parties differ as to the exact
content of the ‘usual terms and conditions’ or what
exactly comprises the ‘usual
terms and conditions’ but
what is clear is that a written quotation would be furnished to the
respondent. According to the
respondent, this would be pursuant to an
enquiry by it about the availability of goods to be supplied. The
applicant alleges that
the quote would be accepted by the respondent
signing and returning it to the applicant. The respondent disputes
this. It states
that a purchase order would be issued and that such
purchase order and no other document constituted acceptance by the
respondent
of the applicant’s quoted price, the latter being
regarded as the offer. According to the respondent, on occasion the
purchase
order would differ from the quotation as typically it
specifies a different combination of goods than contained in the
quotation.
A purchase order would lead to the generation of a tax
invoice and at month-end a statement of tax invoices so generated
would
be compiled and forwarded to the respondent. According to the
applicant invoices were to be settled 30 days from date of statement
whilst the respondent alleges that invoices would be settled on 36
days with a discount to apply. Breakage or shortages would be
invoiced to the respondent upon return of the goods to the applicant
and included payment in the next monthly statement.
Applicant’s
claim
[27]
As stated before, the applicant
initially claimed that it was owed at least an amount of R395 401,93
by the respondent for
goods supplied and services rendered by the
applicant to the respondent. In paragraph 14 of its founding
affidavit, however, the
applicant claims that the respondent was
indebted to it in the sum of R982 311.78 as at 28 February 2015.
[28]
The applicant alleges further that
on 23 March 2015 it received two payments from respondent, in
the respective sums of R69 147.84
and R12 198.00.
Neither of these payments, it claims, directly related to the
amount due as set out
in paragraph 14 of its founding affidavit
referred to above, although according to the applicant, a case could
be made out for
the payment of R12 198.00 being in respect of
the Durban account due as at 31 March 2015.
[29]
The applicant alleges further that
on 31 March 2015 it received a payment in the sum of R89 779.56.
According to it,
the respondent was at that date at least R892 532.22
in arrears with the payments due to applicant.
[30]
On 14 April 2015, the applicant
alleges that it received a further payment of R100 000.00 from
respondent. The outstanding
and overdue amount was then R792 523.22.
[31]
It further alleges that on 20 April
2015 Glasser advised the respondent that no further orders would be
met until its account was
brought up to date. That led to a flurry of
emails being exchanged between himself and the respondent’s
employees to try
and rectify the situation. However, according to
Glasser, it was abundantly clear that the respondent was unable to
meet its financial
obligations to the applicant as at 31 March 2015
and that as at the end of April 2015 a further R347 917.95 would be
due for payment
by the respondent.
[32]
Glasser alleges that the respondent
has also retrenched its staff in the Johannesburg office due to its
financially adverse situation
as indicated in the letter in terms of
section 189
of the
Labour Relations Act 66 of 1995
dated 17 March
2015.
[33]
He further contends that he also
ascertained that the respondent was indebted to other creditors,
namely:
Avis
Van Rental (CPT) : ± R40 000.00
Snap
Shot Printing (CPT) : R1.2 million
Circa
(JHB) : amount not known
Prime
Air (JHB) : R1.8 million
Deon
Mama Events
: R900 000.00
Tabitha
Promotions
: R59 000.00
[34]
He claims that he was also informed
that the respondent entered into some scheme or arrangement with
Circa, in order to reduce its
indebtedness, but has been unable to
ascertain the exact nature thereof and the amount involved in the
time available to him.
[35]
The applicant alleges further that
on 22 April 2015 the sum of R397 130.29 was paid to the applicant at
10h02, which constituted
a breach of the respondent’s
undertaking to pay R400 000.00 on 21 April 2015. The
payment reflected in the applicant’s
account only the next day,
namely, 23 April 2015.
[36]
The applicant contends that the
respondent has made no effort to pay the balance of at least R395
401.93 which it alleges, as from
the date of 30 April 2015 has
clearly been overdue. The respondent will be indebted to the
applicant in the sum of R743 319.88.
Glasser is of the belief
that the respondent is not in a position to pay the applicant what it
owes. He alleges that the
respondent simply does not have the
money to do so and is commercially insolvent.
[37]
The applicant’s claim changed
in the replying affidavit. In it it claims that it is owed an amount
of R771 907.00. This
is in reaction to the answering affidavit
revealing that a number of payments were in fact made. Perhaps for
the sake of clarity
it is convenient to deal with the allegations in
the answering affidavit.
[38]
The respondent denies that it is
indebted to the applicant. According to the respondent the alleged
debt does not exist. It attached
a creditor reconciliation document
to its answering affidavit as annexure ‘DP3’, which it
alleges is a reflection of
the correct position between the parties
and shows no indebtedness.
[39]
This reconciliation document showed
a total amount of R 982 311.78 as disputed invoices. In respect
of these disputed invoices,
the reconciliation document shows that a
payment of R 950 236.74 was made between March and May 2015. The
balance of R 32 075.04
is regarded as ‘awaiting credit
note from stuff rentals – duplication of invoices’. The
respondent alleges that
the applicant faced challenges in
record-keeping and habitually omitted payments made.
[40]
In the replying affidavit the
applicant alleges that ‘[E]
ven
after all the payments made by Respondent to Applicant since the
launch of these proceedings, Respondent remains indebted to
the
Applicant...’
The alleged debts
are listed as: a total value of invoices issued to respondent with
corresponding orders in the amount of R 2 422 414.04
–
R 2 023 322.42 (total value of payments received from
respondent = R 399 091.62; total value of goods delivered
to
respondent for which no purchase orders issued by respondent, but tax
invoices issued by applicant, in the amount of R 252 881.30
(‘this amount is reflected in the respondent’s
reconciliation document attached as annexure ‘PG4’ to the
founding affidavit as an ‘offset of debtors invoices’)
and total value of goods delivered but no purchase orders issued
by
respondent and no invoices issued by applicant in the amount of
R119 934.08. As such, the applicant alleges a total sum
due by
respondent in the amount of R 771 907.00. No dates, statements
of account or quotations accompanied these allegations.
[41]
The respondent dealt with these
allegations in the further affidavit. The reconciliation document
attached to the further affidavit
shows a total sum invoiced for
November 2014 to April 2015 in an amount of R 2 422 414.04 and
payments of R 2 023 322.42
leaving a balance of R
399 091.62 (which seems to correspond with the replying
affidavit). From that amount, however, there
was an off-set of the
amount of R 237 905.31 as well as a payment of R 143 344.74
effected by the respondent on 3 June
2015. The replying affidavit
does not deal with these amounts.
[42]
The respondent alleges that there
are duplicated invoices for which credits in the amount of R
35 269.32 should be passed.
There are also credit notes in the
sum of R 100 301.76 which are still to be passed. According to
the respondent, the applicant
has failed to mention two further
invoices reflecting amounts owing by the respondent in the sum of R
55 656.17, thereafter
further invoices paid in the amount of R
314 954.64. The respondent alleges that simply based on
the amounts mentioned
above a sum of R252 881.30 would be owed
by the respondent to the applicant. The respondent, however, alleges
that the applicant
owes it a sum in the amount of R587 239.08 as
shown in annexure ‘RR2’; therefore, through the
application of set-off,
it is the applicant which is indebted to the
respondent
.
From
that amount stood to be deducted an amount of R 81 476.48 as per
annexure ‘RR3’. The amount payment of R 252 881.30
was accompanied with a 50% off-set leaving a zero balance. The
respondent contends that no amount is owed to the applicant or,
at
best for the applicant, there is a dispute as to whether the amount
of R 252 881.30 is owed by the respondent and nothing
further.
[43]
It is clear that the respondent has
been making payments to the applicant since the lodgement of the
proceedings or even before,
which the applicant has not completely
mentioned in its papers.
[44]
The basis of the claim and the
amount claimed changed in the replying affidavit. Mr van der Linde
submitted that at the very least
the applicant is owed an amount of
R252 881.30 by the respondent. It seems to me the applicant
could not persist in alleging
that it was still owed an amount of
R771 907.00 as it stated in its replying affidavit or other
amounts earlier claimed.
[45]
Whilst I accept that a lot more
detail could have helped, I cannot find that the explanation given by
the respondent is so bald
such that it must be held not to be bona
fide. I am of the view that there is a factual dispute at least from
the papers with regards
to the amount of R 252 881.30. Having
been restricted to the claim of R 252 881.30, Mr van der Linde
argued that the
respondent simply ‘wipes out’ amounts
without explaining the reasons for the off-set and how it was
determined.
[46]
I do not think the defence is
manufactured for the purposes of engineering a dispute that does not
exist. I say this because the
amount first appeared in the PG4
reconciliation annexure which was received by the applicant from the
respondent, and attached
to its founding papers. There was an
indication of ‘off-set of debtors invoices’ already at
that point. Furthermore,
‘RR1’, the reconciliation
document attached to the further affidavit, contains the following
inscription next to the
amount of R252 881.30: ‘
Invoices
from Oasys for Presidential Inauguration – Offset
’.
This in my view is consistent with the allegation made in the further
affidavit that an amount of R252 881.30 was
accompanied by a 50%
offset.
[47]
At the very least there is a dispute
about whether the amount of R252 881.30 is owed. I am unable to
find that such dispute
raised by the respondent is not genuine and
bona fide. It can also not be said that that the grounds upon which
the dispute is
raised are not reasonable. It must be remembered that
at this provisional stage the court may reach a conclusion that the
claim
is bona fide disputed on reasonable grounds, even though on the
balance of probabilities the applicant’s claim has been made
out.
Respondent’s
inability to pay its debts
[48]
Even if the applicant were to
satisfy the court on the papers that it has a claim against the
respondent that is not bona fide disputed
on reasonable grounds, it
still has to show that the respondent is unable to pay its debts as
and when they fall due. The applicant
contends that the respondent is
commercially insolvent. It bases this assertion on alleged repeated
late payments as an indication
that the respondent is unable to meet
its commitments as and when they fall due for payment and that it was
not only indebted to
the applicant but it owed a list of creditors
large sums of money. It places a lot of emphasis on the fact that
most payments were
made during the course of these proceedings and
invites the court to take that into account as a factor.
[49]
Not only do the allegations about
other creditors amount to hearsay evidence, the respondent has given
a detailed account of when
and how those creditors were paid. It set
out their names and dates of those payments. Glasser admits that he
is not privy to the
respondent’s internal workings. He cannot
go beyond the statements made by the respondent in its affidavit in
this regard.
He also presents no evidence to gainsay what is being
alleged by the respondent in its papers. Sean Wyer’s (‘Wyer’)
confirmatory affidavit simply confirms paragraphs 17 and 18 of the
replying affidavit. The allegations in these paragraphs are
general
statements which take the matter no further. In any event, Wyer could
only testify about the respondent’s state of
affairs up to the
point of his resignation, May 2015.
[50]
The respondent placed before the
court its consolidated financial statements for the year ended 31
December 2014 to demonstrate
that it was neither actually nor
commercially insolvent. The applicant invited the court to draw
certain conclusions from the respondent’s
annual financial
statements. It contends that the financial statements show that the
company has been trading at a loss for the
last two years and has
inflated a list of its assets in the balance sheet. As an example of
the latter, the applicant alleges that
the respondent has stated
goodwill as an asset where it has made an operational loss in excess
of double the amount alleged to
represent goodwill, which it views as
questionable. It further views as unrealistic the manner in which
depreciation has been reported.
It also disputes that deferred tax
can be considered an asset and drew the court’s attention to
other aspects of the financial
observations which it viewed as
curious.
[51]
I am not persuaded by the
applicant’s contentions on this point. Firstly, Glasser is not
an expert; he is therefore not qualified
to draw the conclusions he
does from the financial statements.
[52]
Secondly, while keeping in mind that
a court is required to independently satisfy itself as to the
respondent’s state of financial
affairs, it is an important
factor that the respondent’s consolidated financial statements
were examined by external auditors
and approved and signed by the
respondent’s directors on 26 March 2015. Paragraph 10 of the
financial statements records
that the directors believe that the
group has adequate financial resources to continue in operation for
the foreseeable future
and that the annual financial statements have
been prepared on an on-going basis. Paragraph 12 states that the
directors have performed
the required liquidity and solvency tests as
required by the new Companies Act.
[53]
Thirdly, the current assets exceed
the current liabilities. The respondent has trade and other
receivables, cash and cash equivalents
sitting at approximately R 89
million in 2014 against current liabilities of about R50 million.
[54]
Gross profit was R97, 361, 958 and
the operating loss R 26, 878, 033. Total assets were approximately R
198 million against liabilities
of about R 112 million. It is not for
Glasser to dispute these figures as he has no knowledge of the
respondent’s business
and is not an expert.
[55]
I am satisfied that as at 31
December 2014, the respondent was neither factually nor commercially
insolvent. The fact that it ran
at a loss operationally for the past
two years does not mean that it is commercially insolvent as long as
it can show that it has
resources from which to meet it current
obligations. For the purposes of assessing its commercial insolvency,
it matters not that
the respondent was not profitable in the past
year or two. (
Orestisolve
supra
at para 74).
Conclusion
[56]
My findings regarding a bona fide
dispute being raised on reasonable grounds and the fact that on the
papers the applicant has not
been able to show that the respondent is
commercially insolvent provide sufficient basis for me to decline
granting the provisional
liquidation order.
[57]
As regards the issue of costs, Mr
Troskie argued that the application constitutes an abuse of process
and therefore the applicant
should be visited with a special cost
order on an attorney and client scale. The applicant alleges in its
replying affidavit that
it was advised by its attorney that an action
to recover what was due would take in excess of two years to
complete. When he advised
his attorney that the matter was far more
urgent and that he was convinced that the respondent was unable to
pay its debts due
to the applicant in any case, he was advised that
in the light of acts of insolvency that had been committed, its
interests would
be best served by bringing liquidation proceedings.
[58]
Whilst the applicant should not have
brought this application, I am not convinced that this is a clear
case of abuse of process.
It seems to me, the applicant chose a route
which it believed could best serve its interests (albeit wrongly so).
The applicant’s
point that payments are made late is not
unfounded, although a claim could have been enforced by way of the
normal route of enforcing
a debt. There does seem to be lack of
coordination between the parties in respect of their accounts
reconciliation. In light
of that, I am not convinced that a special
cost order is warranted.
[59]
In the circumstances, I make the
following order:
1.
The application for the provisional winding
up of the respondent is dismissed with costs.
N
P BOQWANA
Judge
of the High Court
APPEARANCES
FOR
THE APPLICANT: Adv. D J A van der Linde
INSTRUCTED
BY: Michael Ward & Associates, Wynberg.
FOR
THE RESPONDENT: Adv. A J Troskie SC
INSTRUCTED
BY: Shepstone & Wylie, Umhlanga Rocks, c/o Shepstone &
Wylie, Cape Town.
[1]
In
the Old Companies Act “
Court
”
in
relation to any company or other body corporate, means the Court
which has jurisdiction under this Act in respect of that company
or
other body corporate…”
[2]
That
section provides that “
(1)
The Court which has jurisdiction under this Act in respect of any
company or other body corporate, shall be any provisional
or local
division of the High Court of South Africa within the area of
jurisdiction whereof the registered office of the company
or other
body corporate or the main place of business of the company or other
body corporate is situate.”
[3]
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 (3) SA 623
(A) at
634H – 635C.
[4]
See
National
Scrap Metal (Cape Town) (Pty) Ltd and Another v Murray & Roberts
Ltd and Others
2012 (5) SA 300
(SCA) at para 21 and 22